fbpx

Why do I Need a Buy-Sell Agreement for my Business?

| ,

If you are a business owner, you know that planning for the unknown and unforeseen is critical. For business entities with multiple owners, the most common tool for this type of planning is a Buy-Sell or Buyout Agreement. Buy-Sell Agreements are contracts between the owners in a business that list out what happens to the ownership equity of an owner after he or she exits the company.

Importance

The most common reasons an owner may exit a business are death, disability, or divorce. These things happen to people all the time, so why are Buy-Sell Agreements so important? Consider the following justifications:

  • They prevent dissolution of the business, allowing for operations to continue smoothly when something unplanned or disastrous happens.
  • They serve as later proof of an agreed upon decision for certain situations.
  • They prevent disputes and litigation.
  • In some states, partnerships may face complete dissolution upon the occurrence of certain events, unless a partnership agreement addresses it directly.

Components

Buy-Sell Agreements may be standalone agreements or incorporated in the Operating Agreement (for a LLC) or Bylaws (for a Corporation). Buy-Sell Agreements may, and in most cases should, have other optional provisions that suit your business’s specific needs. At their core, Buy-Sell Agreements should address the following:

  • Whether or not an owner’s interest in the company must be bought out;
  • A pre-determined price, or method of valuation to determine price, for the owner’s interest;
  • Whether the interest will be bought by the other owners or some third party; and
  • Buy-Out triggering events

Virginia & North Carolina Specifics

              As noted, partnerships may face complete dissolution in some states unless specifically dealt with in partnership agreements. In Virginia, one of the events that will trigger dissolution is upon application by one of the partners and a court determines that it is not practicable to carry on the business in accordance with the partnership agreement. (Va. Code Ann. § 50-73.117). However, if there is a buy-sell agreement in place, the court would be very hard pressed to go against it. 

              In North Carolina, dissolution will occur upon the death of a partner, unless partnership documents indicate otherwise. (N.C. Gen. Stat. § 59-61). This specific statutory provision is a more compelling reason to have a Buy-Sell Agreement in place.

Solutions

Are you a part of a partnership or are there multiple owners involved in your LLC or Corporation?

Are you forming a new business with multiple owners? Do you have questions about Buy-Sell Agreements? Give us a call! Our team is committed to providing turnkey solutions for your business through a streamlined efficient process.

Client Reviews

We are proud to have more than 100 five-star reviews across Google, Avvo, and other platforms.
  • Being a first time business owner, you want to make sure you're making all the right decisions. Choosing McCormick Law & Consulting, along with Emma and Taylor, made the process so easy! Emma understood right away what my primary concerns were, and was able to execute everything in a very timely manner! She was extremely easy to talk to and she took the time to explain everything to me, settling my nerves with taking this next big step. Taylor made the process of making it all official completely stress free.
    Crystal G.
  • I am a criminal defense attorney licensed in both North Carolina and Virginia. I have taught attorneys across the State of North Carolina on varying trial matters ranging from jury selection to DWI defense. I definitely could have created my new business, Davis Wealth Management LLC, but boy that would have been a mistake. Because business formation is not an area in which I practice, I had no idea where my blind spots were, and let me tell you there were plenty. The knowledge I received from the firm is invaluable.

    John McCormick and his firm are very reasonably priced and quickly and efficiently assisted me in creating my new business. It was completely turn key; they did everything for me.

    I can't recommend their services enough. Also, huge shoutout to Taylor who kept me informed every step of the way!

    James D.
  • I highly recommendMcCormick Law & Consulting! My Father and I live in two separate states and the properties he needed legal services for are in Virginia. I reach out to Taylor on two separate occasions and she was very responsive and professional. The first time we used their services it went so smoothly that by the time I needed their services again I knew I could just send over the necessary documents, pay my invoice and rest assured it would all get taken care of. They eliminated the stress that comes with handling some else's affairs and I so appreciate that.
    Heather C.
  • From the the very 1st conversation with their office it was clear they would be responsive to all my questions and any support with my business. They are relatable and make their customers feel comfortable with any questions and or concerns that might arise while using their services. I am happy to have found them to support me with my small business needs!
    Lisa N.
  • I can't say enough great things about the professional team at McCormick Law & Consulting! We really had no idea of who to trust and who we could count on for quick and professional service in the Hampton Roads area for getting our new business up and running smoothly and the Team at McCormick Law & Consulting really knocked it out of the park with us!
    Jerry G.
  • I had the good fortune of working with McCormick Law on a business sales contract. I sent them the initial draft provided by the buyer along with a few notes about my specific concerns. They carefully went through the document and provided meaningful additions and corrections that better protected my interests. Thanks to Bobby and John for their personalized attention.
    Arthur B.
  • Mr. McCormick and his entire team were amazing! They assisted me in a legal matter concerning a business dispute. Mr. McCormick is highly experienced, ethical, dedicated, and was prepared to fight my legal matter in court if necessary. I thank the entire team for believing in me and would highly recommend them to anyone!!
    Jeanette L.
  • We used McCormick Law to start up another LLC and it was a great experience. I have used other lawyers and attorneys in the past and I experienced delayed responses and it was what I have come to expect.From the first interactions with Robert and his team, I was surprised to how responsive they were. I even mentioned to my new business partner that this was not normal and I was very happy.Needless to say I will be using McCormick Law for all of my business needs in the future.
    Colton S.
  • I utilized this firm for help on a real estate matter. I felt comfortable with the advice I received and am happy to continue doing business with them and referring others to the practice. Everyone I engaged with was welcoming and made the process very easy.
    Christian S.
  • John and his team were great to work with. They provided advice for starting my business and set everything up in an efficient and timely manner. I will definitely recommend them to others!

    Elizabeth H.
  • I contacted McCormick Law firm to register my moving service in NC. They did an outstanding job. Completed the process way sooner than I expected. Thank you, Taylor.

    Steve T.

    Let's talk.


    • Disclaimer: In communicating with us in response to this website, do not send any confidential information. Information sent to us in response to this website will not be treated as confidential and does not constitute an attorney-client relationship. Our professional obligations require us to perform a conflicts check before undertaking any legal representation of you. No attorney-client relationship exists or should be assumed as a result of this communication. By submitting this form, you are opting into our mailing list (your information will not be shared with anyone else).

    • This field is for validation purposes and should be left unchanged.

    Disclaimer

    McCormick Law, PC d/b/a McCormick Law & Consulting is a boutique business and real estate law firm located in Norfolk, Virginia & Raleigh, North Carolina, that seamlessly serves clients throughout Virginia and North Carolina. Whether you are a new or existing client of the firm, McCormick Law, PC, cannot represent you on any new matter until the firm has made a determination that there is no conflict of interest and that it is willing to accept the new engagement. The testimonials on this website reflect the real-life experiences and opinions of our clients. However, the experiences are personal to those particular clients, and may not necessarily be representative of all clients. We do not claim, and you should not assume, that all clients will have the same experience. Your outcome may vary.

    © McCormick Law & Consulting